Trion Properties: How an ex-Investment Sales Broker Built a $100M Portfolio

I recently published an eBook detailing what 20 real estate operators wish they knew when starting their firms, which is chalk-full of great tips for aspiring real estate entrepreneurs. One of the contributors was Max Sharkansky of Trion Properties, an owner/operator based out of LA. I met up with Max a few weeks back in NYC and was incredibly impressed with his approach to investing, the company culture he’s created at Trion, and the portfolio he’s built since starting the firm in 2005.

I was inspired by Max and wanted to share the Trion story, some of the toughest challenges he’s faced, what has him excited, and advice he’d have for those just starting their career.

Enter Max:

Tell us about the Trion story. Why did you decide to go off on your own?

My partner, Mitch Paskover, and I had been friends since we were teenagers and during college both decided to go into the real estate business, Mitch into finance and I went into investment sales at Marcus & Millichap. We both knew from the outset that being intermediaries wasn’t going to be our careers, but rather a means to an end. By 2005, we were among a group of twenty-somethings who were strong producers in their firms, and being too young for marriage and a mortgage, we had capital on hand to buy our first two value-add multifamily properties in LA. Our business plan of renovate, reposition, lease-up and sell was a success and outperformed even our “best-case” projections. In less than one year we decided to leave our firms and start Trion Properties. We continued buying through the cycle and were fortunate enough to time the peak fortuitously by selling our small portfolio and shifting our acquisition strategy from targeting mismanaged assets from passive owners to targeting distressed assets from lenders and servicers. The sale gave us the flexibility and the capital to execute on the strategy throughout the downturn.

Since the recovery, we have built a portfolio of assets located in urban-infill markets throughout California and Oregon with a value-add strategy executed through our vertically integrated management structure.

What are some of the unexpected challenges you’ve encountered in running your own shop? How have you creatively overcome them?

One of the biggest challenges is learning how to become an effective executive while growing your skills as a real estate investor. The vast majority of real estate investors striking out on their own are not thinking about leasing office space in a central or strategic location, what type of accounting software to use, or who should be their first senior-level hires. Unfortunately, there are no magic bullets but my best advice would be to establish a relationship with a mentor who can guide you through the start-up process, and hopefully many years thereafter. You can save yourself a lot of time, money and anguish – and possibly stay out of bankruptcy, by asking someone the answers to a few of those questions.

What has you the most excited about the real estate industry today?

We are incredibly excited about the changing habits of consumers (renters) and our ability to maximize the value of our assets by capturing that market. The amenities that appeal to our primarily millennial tenant base are significantly different than the amenities that appealed to Gen X’ers when we started in the business 15 years ago. The demand lies in more interactive and functional amenities such as Nest Thermostats, common area recreational space, dog runs, and bike sharing; a stark difference from the past where the value was created through improving finishes such as upgrading kitchen countertops from formica to granite and berber carpets. I recently visited one of our properties in West LA and one of the tenants ran up to me to tell me how excited he was about the Nest Thermostat and that was the amenity that sealed the deal for his lease. It’s a thermostat that costs two hundred bucks!! If I would have told a multifamily investor 15 years ago, that a thermostat would be the difference between a prospective tenant deciding to lease versus continuing to search, I am confident that I would have been laughed out of the room.

What advice would you give to a college kid just beginning his real estate career? What about a young professional aiming to go off on his own?

This is a challenging question because it depends on the personality profile of the individual. For someone who is comfortable with sales and has a tolerance of risk for the majority of their income earned through commission, I would strongly recommend taking the intermediary route. In retrospect, I would repeat my career path because I was able to earn more than the average twenty-something while learning the investment side of the business through my senior associates and clients. I cannot imagine that working for even the largest, highest-paying institutions would have had the same earning capacity or given me the access to investment opportunities as a career as an investment sales broker at a top firm. I don’t know how we would have been able to buy our first few acquisitions without the skill of sourcing favorable, off-market opportunities.

For someone who does not have the stomach for volatile earnings and requires a more stable salary, I would recommend starting your career on the investment side of the business with a middle market firm. You will learn significantly more about the business of real estate working with a middle market investor because you are exposed to all aspects of the business irrespective of your position. For example, if you are working in acquisitions, you will be working very closely with not only others within your team but with other teams such as operations and finance, unlike an institution where you will be a much smaller piece of the puzzle with significantly less exposure.

About Me

This is my personal blog where I share tips on starting your real estate career, challenges of doing your first deal, and advice on passive real estate investing. For work, I run acquisitions for Atlas Real Estate Partners, a private investment firm based in NYC where I was the first hire.

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